Wells Fargo Strategic Plan

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Wells Fargo
Strategic Plan

Minnesota School of Business

Capstone: Business Management

Professor G. Whitehead

03/20/2011
Cassie Iris Amundson

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Strategic Plan: Wells Fargo
Table of Contents

EXECUTIVE SUMMARY.. 4
COMPANY BACKGROUND.. 4
CORE PRODUCTS AND SERVICES.. 6
Banking...6
Mortgage.....7
Credit Cards.....8
Insurance ..8
Investments..9
VISION STATEMENT10
MISSION STATEMENT.10
VISION STATEMENT.10
VALUE STATEMENT...10
PEOPLE....11
ETHICS..11
CUSTOMER...13
DIVERSITY..14
LEADERSHIP...........................................................................................................................15
ENVIORNMENTAL ANALYSIS................................................................................................................17
GENERAL ENVIORNMENT17
Demographic Trends17
Economic Trends...18
Political Trends18
Social Trends.20
Technological Trends..22
Global Trends...22
Physical Trends...23
INDUSTRY ENVIORNMENT..23
Entry Barriers...23
Supplier Power...24
Buyer Power....24
Substitute Availability.....24
Competitive Rivalry.25
OPERATING ENVIORNMENT..25
Competitors.....25
Creditors..25
Customers...26
Labor.....26
Suppliers..26
INTERNAL ENVIORNMENT SCAN26
Strengths...26
Weaknesses..27
EXTERNAL ENVIORNMEN SCAN..27
Opportunities.....27
Threats....27

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LONG TERM OBJECTIVES28
CORPORATE STRATEGY.28
LONG-TERM OBJECTIVES.28
PLAN GOALS AND IMPLEMENTATION.28
SHORT TERM OBJECTIVES28
FUNCTIONAL TATICS...29
Functional Tactics: Marketing.29
Functional Tactics: Operations30
Functional Tactics: Business Development.30
Functional Tactics: Service Delivery.30
Functional Tactics: Finance.30
ORGANIZATIONAL AND LEADERSHIP STRUCTURE.31
CRITICAL SUCCESS FACTORS31
CONTROLS AND EVALUATION32
PREMISE CONTROL..32
IMPLEMENTATION CONTROL...32
CONCURRENT CONTROL..32
REFERENCES...33

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Executive Summary
Wells Fargo is a stable and long term company providing financial products such as
banking, mortgages, credit cards, insurance, and investment services to consumers and
business clientele. Wells Fargos mission, vision, and values have propelled them through
rough financial times in the great depression as well as the current economic downturn. Wells
Fargo has a proven history of success and overcoming obstacles. Change management and
the ability to adapt to new environment will be of the utmost importance to Wells Fargo over
the next few years. The financial reform act has made many drastic changes to the way that
companies do business in the financial industry which will directly affect the multi-billion
dollar financial institution. Wells Fargo must ensure that their upper level management pays
close attention to the external environment with emphasis on governmental and legal changes
to the industry standard.
Company Background
Wells Fargo has been in business since 1852. Their first office opened in San
Francisco during the gold rush. The stage coach was used to transport gold and other
valuables. Wells Fargo helped establish the Great Overland Mail service continuing to use the
stagecoach but also adding steam ship, rail road, pony rider, and telegraph. From their
humble beginnings they expanded from California to the rest of the nation. In 1910 they had
6,000 locations nationwide. Then the federal government took over due to the First World
War leaving Wells Fargo with just their initial San Francisco location. Once again Wells
Fargo was resistant and expanded again.
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By 1990 they gained back all of their locations across the nation. In the 1980s Wells Fargo
was the seventh largest bank in the nation. (Wells Fargo, 2011)
Wells Fargo continued to expand throughout the Midwest with their merger with
Norwest in 1998. The merger combined the largest bank presence on the West coast with the
largest presence in the Midwest. After the merger the bank rated first in financial services in
the western hemisphere, mortgage origination services, internet banking, agriculture lending,
student loans, small business loans, commercial real estate, auto finance, and insurance
agency sales. (Wells Fargo, 1998) Wells Fargo merged with Wachovia in 2009 gaining
greater presence on the East coast and Southern states. Wells Fargo now had banking
presence in 39 states and the District of Columbia.

Wells Fargo acquired and merged with many other companies and made many other notable
achievements that can be seen below in the timeline:

- 1852: Wells Fargo & Co. founded in San Francisco
- 1869: Allows the Big 4 in California to gain a controlling interest for rights in the
transcontinental railroad.
- 1888: Wells Fargo releases ocean to ocean service
- 1905: Wells Fargo headquarters moved to New York and merges with Nevada
National Bank
- 1906: Wells Fargo wires the following message Building Destroyed. Vaults Intact,
Credit Unaffected after the San Francisco earthquake.
- 1918: The US Government takes control of the Wells Fargo Brand in the American
Railway Express Agency. Everything but the bank in San Francisco is taken over.
- 1923: Wells Fargo mergers with Union Trust Company

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- 1960: Wells Fargo is acquired by American Trust Company shifting the focus to
banking but keeping the Wells Fargo name.
- 1986: Wells Fargo mergers with Crocker National Corp & Crocker National Bank
- 1987: Wells Fargo acquires personal trust business of Bank of America
- 1988: Wells Fargo acquires Barclays Bank of California
- 1989: Wells Fargo releases online banking to its customers
- 1990: Wells Fargo acquires 4 other banks: Valley National Bank, Central Pacific
Corp., Torrey Pines Group, and Citizens Holdings.
- 1995: Wells Fargo agrees to enter into a jointly owned trade bank with HSBC
- 1996: Wells Fargo merges with First Interstate Bankcorp.
- 1998: Wells Fargo mergers with Norwest making them the 7
th
largest bank in the U.S.
- 2009: Wells Fargo mergers with Wachovia
(Wells Fargo, 1998)
Core Products
Banking
Online Banking: Online banking includes mobile and text messaging banking. Wells
Fargo offers standard online banking as well as applications for mobile devices and
text banking. Currently three are 18.3 million active online banking customers.
ATM Banking: Wells Fargo currently has 12,196 ATMs. 8,029 of these ATMs are
envelope free accepting checks and bills directly. We offer email receipts and
transactions in seven different on screen language.
Our ATMs also feature voice instructions for visually impaired. The ATMs are also
used to market new products and services to the current customer base.
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Business Banking: Our business banking serves over 2.5 million businesses with
annual revenues up to 20 million. Business banking also includes business lending
through capital lines of credit, business credit cards, equipment loans, and commercial
real estate loans. We offer merchant services and process $108 billion in annual credit
card sales. Business payroll services are available as well as year end tax reporting
services.
Wholesale Banking: Wholesale banking is comprised of commercial banking,
treasury management, receivables solutions, payments solutions, and technology
solutions. Commercial banking offers solutions that are tailored to the middle market
businesses with annual revenues from $10-$750 million dollars.
Government & Institutional Banking: This option provides solutions for government,
education, health care, and nonprofit organizations. This can be split into education &
nonprofit banking, government banking, health care financial services, public finance
investment banking, and sales, trading, and syndicate.
Mortgage
Home Equity: Wells Fargo is one of the nations leading prime home equity
originator holding a portfolio of $118 billion serving 2.1 million customers as of
December 2010.
Mortgage: Wells Fargo is the number one total mortgage producer in the United
States. We are also the number one mortgage lender to low-to-moderate income home
buyers. Wells Fargo is the number two mortgage servicer in the United States. Wells
Fargo currently services 12 million loans totaling $1.8 trillion dollars. Wells Fargo
mortgage originations through third quarter of 2010 totaled $262.9 billion dollars.

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Credit
Debit & Consumer Credit Cards: Wells Fargo is the 2
nd
largest debit card issuer in the
United States. We currently have 39.6 million debit card account holders of which
Personal Credit Management: Personal credit management offers unsecured loans and
lines of credit as well as transportation loans, boat loans or other vehicle loans. This
segment holds 1.4 million accounts with portfolio balances of $6.1 billion.
Auto Dealer Services: Wells Fargo is the number 1 used car lender and a leading
provider of solutions for the dealer community. Relationships are currently held with
over 11,000 dealers providing commercial and real estate floor plan lending,
aftermarket products and services through warranty solutions, and banking products
and services for the dealer community.
Education Financial Services: Wells Fargo education financial services is one of the
nations leading private education loan providers with a portfolio of $26.4 billion in
private and federal education (student) loans. This segment currently serves 1.9
million customers and has originated more than $6.4 billion in loans in 2010.
Insurance
Wells Fargo Insurance: Wells Fargo insurance offers personal and small business
insurance. They offer property & casualty, life insurance, and other protection
products. Wells Fargo insurance currently serves 2.6 million customers.
Rural Community Insurance Services: One of the United States largest providers of
crop insurance operating in all 50 states.

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Investments
Retail Brokerage: Wells Fargo Advisors (WFA) currently handles $1.2 trillion in
client assets. WFA provides planning and advice, asset management, estate planning,
retirement planning, and portfolio monitoring.
Wealth Management: Wealth management and family wealth manages more than
117,000 trust accounts. This service provides private banking, investment
management, trust and estate services, financial and business planning services, along
with bank based brokerage offered by WFA.
Retirement: Wells Fargo is a leader in retirement planning. We currenty hold $266
billion in IRA assets. From a retirement 401K account standpoint we hold 3.5 million
plans totaling $231 billion in assets.
Norwest Equity Partners: Norwest Equity Partners is an investment firm that helps
businesses grow into industry leaders. This firm was founded in 1961 and has $30-
$150 million in investments as well as $4.6 billion in capital.
Norwest Venture Partners: Norwest Venture Partners (NVP) is a global investment
firm that manages $3.7 billion in capital. NVP has subsidiaries in Mumbai and
Bengaluru, India, and Herzelia, Israel.
Lowry Hill: Lowry Hill is a firm that has been established for 24 years providing
investment management and financial planning services for high net worth families,
foundations, and endowments. Minimal investments start at $10 million and private
equity investments of $20 million or more. The retention rate for Lowry Hill is 97%.
Capital Markets: Wells Fargo Securities offers investment banking and capital
markets through equities, investment grade debt, high yield debt, loan syndicates, and
advisory.

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Vision
Mission Statement
Wells Fargos mission statement is Our Product: SERVICE. Our value-added:
FINANCIAL ADVICE. Our competitive advantage: OUR PEOPLE (Kovacevich). Richard
Kovacevich has since left Wells Fargo but one thing remains the same, their mission. John G
Stumpf took over the reins in 2007 as the CEO, replacing Kovacevich.

Vision Statement
Wells Fargos vision statement is We want to satisfy all our customers financial
needs and help them succeed financially (Wells Fargo, 2011). The company realizes that
this is a rather lofty statement and they go on to say that This may sound odd to some, but
we dont believe our first job is to make a lot of money. Nowhere in our vision statement will
you find we want to make a lot of money. Our first job is to understand our customers
financial objectives, then offer them products and solutions to help satisfy those needs so they
can be financially successful. If we do that right, then all sorts of good things happen for all
our stakeholders including our shareholders(Wells Fargo, 2011)
Values Statement
Wells Fargo states that their values are what they stand for. These core values boil
down to 5 primary areas: people, ethics, whats right for the customer, diversity and
leadership. These can be seen in their Vision and Values Statement Page:

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People:
We value and support our people as a competitive advantage. We must attract,
develop, retain and motivate the most talented people who care and who work together as
partners across business units and functions. We want to give them the training they need to
succeed in their work. We want them to be responsible and accountable for their businesses
and functions. We want to recognize and thank them for outstanding performance. We
believe everyone on our team is important and deserves respect for who they are and how
they can contribute to our success. We say team members not employees because our
people are a precious resource to be invested in, not expenses to be managed and because
teamwork is essential to help our customers succeed financially. Products and technology
dont fulfill the promise behind a brand people do, people who are more talented, more
motivated, more energized than their competitors.
Ethics:
We strive for the highest ethical standards with team members, customers, our
communities and shareholders. Honesty, trust and integrity are essential for meeting the
highest standards of corporate governance. Theyre not just the responsibility of our senior
leaders and our board of directors. Were all responsible. All 275,000 of us. Corporations
dont have a conscience. People do. Our ethics are the sum of all the decisions each of us
makes every day. If you want to find out how strong a companys ethics are, dont listen to
what its people say. Watch what they do. This is even more important in our industry because
everything we do is built on trust. It doesnt happen with one transaction, in one day on the
job, or in one quarter. Its earned relationship by relationship.

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Our customers trust us to protect their money. They trust us to keep their private information
confidential. They trust our tellers to make transactions accurately and promptly. They trust
our bankers to recommend the right products and solutions for their needs. They trust our
financial consultants to give them the right financial advice. They trust our mortgage
salespeople to manage their application process completely, accurately and as quickly as
possible. They trust our investment bankers to build the right financial models to analyze
business trends, shape investment ideas, raise capital, meet their strategic objectives, and
satisfy all their financial needs.
We behave ethically when we:
Value and reward open, honest, two-way communication.
Hold ourselves accountable for, and are proud of, our decisions and our conduct.
Only make promises we intend to keepdo what we say well do. If things change,
let people know.
Share information with our colleagues that they need, and let them know if things
change.
Avoid any actual or perceived conflict of interest.
Comply with the letter and the spirit of the law.
Acknowledge and apologize for our mistakes, and learn from our errors so we dont
make them again.

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We want compliance and risk management to be part of our culture, an extension of our code
of ethics. Everyone shapes the risk culture of our company. We encourage all team members
to identify and bring risk forward. We should thank them for doing so, not penalize them.
Ben Franklin was right: An ounce of prevention is worth a pound of cure.
Do Whats Best for the Customer:
We value whats right for our customers in everything we do.
Were proud to compete in an industry thats central to the growth of our national and local
economiesindustries where we do whats right for our customers and communities and
make a fair profit at the same time. Our customersexternal and internalare our friends.
We advocate for their best financial interests. We want them to feel as if theyre part of the
Wells Fargo familythat were their bank.
We put their long-term financial interests first by:
Starting every discussion with whats best for them.
Exceeding the expectations of internal and external customerswe want to surprise
and delight them.
Investing in long-term relationships that we want to last a lifetime.
Speaking and acting with them in mindbeing approachable, natural, friendly,
respecting their time, empathetic and caringand speaking in language our customers use
and that they can easily understand.
We need to share customer information among our businesses to better understand how we
can satisfy their needs, but we do not sell information about our customers to third parties nor
do we share it with outside parties who may want to market their own products to our
customers. Our customers trust us to protect their confidential information.

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They trust us to use that information to provide them with products and services that can save
them time and money. Were committed to protecting their information. Weve been doing it
for almost 160 years.
Diversity:
We value, and learn from, the diversity of team members, customers and
communities. We want all our team members to feel valued for their culture, skills and traits,
and to know they can fulfill their ambition and help our company succeed. We want them to
feel comfortable and enjoy being part of Wells Fargo. We cant be one of the worlds great
companies unless we become more diverse and inclusive.
Its a tremendous business opportunity because it enables us to use creativity and multiple
perspectives to respond fast and effectively to customer needs.
All our leaders must promote diversity and inclusion in every aspect of our business and be
accountable for measurable results. We must do better in recruiting, placing and retaining
diverse team members. We also must increase the number of people of color, women and
other diverse groups in senior leadership.
The spirit of diversity and inclusion doesnt exist on a balance sheet. It lives in our hearts and
minds, and most important, in our behaviors, including:
Attracting and retaining a diverse work force.
Making sure diverse candidates are part of the selection process for positions for
which were responsible.
Building diverse leaders by rotating them through jobs in a variety of functions and
businesses to give them a broad view of the company.
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Seeking out diverse perspectives.
Supporting the diversity of our team members, customers and communities.
Earning each others mutual trust.
Getting outside ourselves and taking a clear, objective view of our behaviors to see
ourselves as others see us.
By making diversity a competitive advantage, we can make our company a better place to
work, better understand our diverse customers needs, and give customers and communitys
outstanding service and deliver more value to our stockholders.
For example:
We integrate supplier diversity into our sourcing and procurement and measure our
progress publicly against our goals. Were committed to spend at least $1 billion
annually with certified diverse suppliers by 2013.
Our Diverse Segments team helps create and execute strategies so we can earn more
business from, among others, our Latino, Asian- American, African-American, and
Lesbian-Gay-Bisexual-Transgender (LGBT) communities.
Our leaders and team members participate in diversity councils and team member
networks for professional and leadership development, mentoring and community
involvement.
Leadership:
Were all called to be leaders. We believe everyone can be a leader that
leadership is not the exclusive domain of senior managers. Were all called to be leaders
to be the link between the vision of Wells Fargo and our customers.

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We define leadership as the act of establishing, sharing and communicating our vision and
the art of motivating others to understand and embrace our vision. Leaders are accountable.
They share the credit and shoulder the blame. They give others the responsibility and
opportunity for success. A good leader inspires a team to have confidence in her or him; a
great leader inspires a team to have confidence in themselves.
When a customer is waiting for an answer, we have to be able to respond to them fast, on the
spot. Thats a competitive advantage. Leaders dont wait for an answer from headquarters.
They dont rely solely on policy manuals at that moment of truth when they have to come
through for the customer. They consider themselves equal partners in a team effort to achieve
our vision.
When the team needs help, leaders pitch in just like everyone else. Theyre involved. Theyre
hands on and available. They take personal ownership for a customers problem and dont let
go until that problem is solved.
No one tells them to do it. They just do it.
The best leaders are the best coaches. They dont rely on authority or force of personality.
They believe in the inherent knowledge and talent of every team member. They believe our
people have the answer to every problem and every opportunity.
They empower their people to develop ideas, test them, quantify the results, and then share
the good ones with our other businesses and functions throughout the company.
Leaders connect to our vision. They share their passion and their discipline about how to
make our vision come alive. Only when a team member understands how much the leader
cares does the team member then permit the leader to lead.
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Leaders learn from each other. Thats an advantage of being big. We share ideas, give ideas
and search for the best ideas across our company. We dont resist a good idea simply because
it wasnt invented here.
Were always searching across the company for the single best way to do something and
adopting it wherever it applies to improve the customer experience, keep customers,
attract new ones, increase revenue and reduce expenses. Its not the strongest or most
intelligent who survive in our industry, but those who best adapt to change. By being
common where possible and custom where it counts, we can take full advantage of the
knowledge and experience of all our businesses and the creativity of all our team members.
(Wells Fargo, 2011)
Environmental Analysis
The environmental analysis is comprised of three segments, the general environment,
industry environment, and the operating environment.
General Environment
The general environment is composed of trends in the broader society that influence
and industry and the firms in it (Ireland, R., 2009, p.45). The general environment is
comprised of seven main segments. These segments are demographic trends, economic
trends, political/legal trends, sociocultural trends, technological trends, global trends, and
physical environment trends. These are expanded on below:
Demographic Trends
Demographics can be described as the changes in population size, age structure,
geographic distribution ethnic mix, and income distribution (Ireland, R., 2009, p.45).

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These trends are important to keep an eye on however a business cannot change the
demographics of an area. They need to understand the changes and adapt to them in different
areas of the United States.
Wells Fargo has shown their ability to tailor their services to their market; many of
their bankers are multi lingual in order to handle their diverse population. Wells Fargo offers
services for low income through high incomes. They have a diversified portfolio and options
for every income level.
Economic Trends
Our current economy is in despair. The interest rates are down but the
unemployment rates are up and so are foreclosures. Wells Fargo had decided to stay out of
the subprime market so they fared better than their competitors during the economy downfall.
Wells Fargo has been able to pay back the bailout funds provided by the federal
government and still made significant earnings in 2010. Despite the economy being down
Wells Fargo has found ways to help their customers and continue to be profitable in a
recession like economy.
Political Trends
Political/Legal implications have become very stringent in the banking and mortgage
industry. Many changes are going into effect from the financial reform law which is the most
recent and pressing trend that plagues the financial industry. Changes are outlined in an
article from the Christian Science Monitor, they can be seen below:

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New Consumer Watchdog: The bill establishes a Consumer Financial Protection Bureau
within the Federal Reserve. This agency will enforce existing consumer-oriented regulations
that apply to big financial firms, mortgage-related businesses, and payday and student
lenders. It will also ensure that the fine print on financial services is clear and accurate, and
will maintain a single toll-free hotline for consumers to report possibly deceptive practices.
Financial Early Warning System: The law sets up a Financial Services Oversight Council
that is intended to work as a sort of bureaucratic early warning radar that scans the horizons
looking for trouble in financial markets. Composed largely of existing officials, such as the
Secretary of the Treasury, the group could require Federal Reserve oversight for big nonbank
financial firms whose failure might destabilize the US economy. The council could also vote
to require big, troubled companies to sell off assets but only as a last resort.
Breakup Authority: Federal regulators will have the power to seize and dismantle troubled
financial firms whose collapse might pull other companies down as well. This resolution
authority would be overseen by the Federal Deposit Insurance Corporation. Taxpayers would
pay for upfront costs but regulators would then be required to recoup the money by levying
fees on financial firms with more than $50 billion in assets.
Tighter Leash for Financial Firms: The bill establishes tight restrictions on the ability of
banks to trade in financial markets with their own funds. Proprietary trading when banks
place market bets for their own profits, instead of their customers will be banned. Banks
will be able to invest sums equal to only 3 percent of their capital in hedge and private equity
investment instruments. In addition, the complex financial risk swaps known as derivatives
will face comprehensive regulation for the first time. Most will have to be traded through
public clearinghouses or exchanges.

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Mortgage Reform: Banks and other financial companies must review the income and credit
histories of mortgage applicants, to ensure they can afford payments. Firms that bundle
mortgages into pooled investment instruments must keep at least 5 percent of these
instruments on their books. This is intended to serve as an incentive for the firms to make
solid loans not questionable ones that are then dumped entirely on outside investors.
(Grier, P., 2010)
As seen above there are many regulations to ensure that another mortgage or financial
meltdown happens on Wall Street. The federal government hopes that these changes will help
stabilize the financial industry and regain consumer trust. These changes are at the forefront
of every financial institution. The law is beginning to be implemented and it has left many
companies scrambling to make the necessary changes to comply with the new law.
Social Trends
Wells Fargo has a track record of being a socially responsible company. A quote from
the 2009 Corporate Social Responsibility Report says it all Our vision for social
responsibility builds on our corporate vision of helping our customers and that means
everyone in our communities succeed financially. At Wells Fargo, we believe our success is
tied to their success. Its a relationship we honor by contributing to better economies and
environments, and by creating opportunities for greater prosperity for individuals of all walks
of life. In this report, we show how were striving to be a strong, stable, and socially
responsible financial services company which benefits us all (Wells Fargo, 2009).
Wells Fargo has strategic focus areas for corporate social responsibility. These
strategies can be broken down into 5 categories seen below:
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Environmental Stewardship
Greener products
Building sustainable communities
Team member engagement
Team Member Engagement
Health and wellness
Diversity and inclusiveness
Team member giving and volunteering
Ethical Business Practices
Governance
Code of ethics
Risk management and compliance
Product and Service Responsibility
Fair and responsible lending and pricing
Access to products and services
Education and trusted advice
Community Investment
Philanthropy
Financial education
Supplier diversity
Community partnership
(Wells Fargo, 2009)

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Wells Fargo has a genuinely diverse workforce. In some Californian stores, one in
three workers is foreign born and the bank provides language classes to employees as well as
allowing extra time to learn for new employees whose first language is not English
(Bradford, 2007). Wells Fargo also won the Leading by Example Award in 2005 from The
Center for Womens Business Research. The Leading by Example Award recognizes
individuals or organizations that are enlarging the possibilities for women business owners.
The recipients of this award set the standard for others by demonstrating the courage and
leadership to be a role model, and initiate programs and policies that unleash the full
economic potential and power of women entrepreneurs (Bradford, 2005).
Technological Trends
Technology trends are becoming more prevalent in the financial industry. It also
provides a threat for financial businesses. Many new programs and online firms are available
so from a brick and mortar standpoint businesses must ensure they continue to provide a
competitive advantage.
Global Trends
Although Wells Fargo does not operate globally they do have customers from
different countries and ethical backgrounds. It is important for any business to understand
what is going on from a global perspective and apply that into their business. The most recent
disaster in Japan coupled with the problems in the Middle East is at the forefront of most
consumers minds. A company should be aware of consumer fears or needs based on global
changes. Some great examples of global awareness by Wells Fargo would be their donation
to the tsunami relief in Japan. Wells Fargo donated $1.5 million dollars to aid in disaster
relief and recovery.
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Physical Trends
Wells Fargos commitment to the environment can be seen in their Corporate Social
Responsibility Report of 2009. Wells Fargo noted that We run our company as efficiently as
possible and take many other steps to protect our natural resources and benefit future
generations. We engage customers and communities in our stewardship efforts to achieve
greater impact (Wells Fargo, 2009). Wells Fargo has identified that the environment is one
of the most common concerns from the physical environment and they have capitalized on
this opportunity to support positive environmental trends.
Industry Environment
The industry environment is comprised of entry barriers, supplier power, buyer
power, substitute availability and competitive rivalry. Each category of the industry
environment will be reviewed and analyzed below:
Entry Barriers
Potential entrants can be a threat to firms already competing in an industry; by
entering that industry, new firms can take market share away from current competitors (R.
Ireland, 2009 p.50). Wells Fargo is an established firm that holds the majority of the financial
industry along with their major three competitors. New entrants in the financial industry are
not considered a threat for Wells Fargo. The financial industry requires a lot of capital and
trust. Currently none of the industry has a lot of trust but they do have capital to make
investments and decisions that a new entrant to the industry does not have. There is a very
high entry barrier in the financial industry.

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Supplier Power
Supplier power is mainly related to capital in the financial industry. With capital
being harder and harder to obtain the suppliers do hold a lot of power over the financial
industry. Fannie Mae and Freddie Mac as well as FHA and VA have increased their
guidelines for mortgages to ensure that they are good investments; they are less willing to
back mortgages leaving less business for the financial/mortgage sector. The one thing that
Wells Fargo has going for it in this area is that they hold a large amount of capital and have
the ability to invest and keep mortgages on their own portfolio. This helps lessen the
restrictions that are put in place by other investors.

Buyer Power
Buyer power is high in the financial industry. Since it is a service based industry if
they do not please the consumer they have other options. There are no switching costs to go
from one bank to another bank and from a mortgage standpoint there are costs to change but
they are often coupled with a lower rate either washing the change or even improving the
buyers position. The products available by the financial industry are very similar leaving the
buyer lots of other options if they are not happy with the current one.
Substitute Availability
Substitute products have the potential to influence an industrys profitability
potential. Substitute products are goods or services that perform functions similar to an
existing product (R. Ireland, 2009 p.53). The financial industry has four major players that
all offer similar products and services. There is a high degree of substitutes available to the
end consumer.
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Competitive Rivalry
Competitive rivalry exists between Wells Fargo, J.P. Morgan Chase, Bank of America
and Citigroup. Wells Fargo has done a great deal of work to differentiate their products from
that of their competitors allowing them to keep a good reputation in comparison. The
problem with this rivalry is that there are very low switching costs in the financial industry. It
is the consumers money so they are able to take it away and give it to another competitor if
they are unhappy.
Operating Environment
The operating environment includes five segments, competitors, creditors, customers,
labor and supplies. These segments are dissected below with relation to the financial industry.
Competitors
Competition is relatively low; there are only four major choices in the financial
industry. This competition has not hindered the performance of Wells Fargo and with the
recent acquisition of Wachovia they have gained even more momentum to propel them over
the competition. They have a strong foot hold on the banking and mortgage markets.
Creditors
Credit is extended by Wells Fargo but Wells Fargo has some major investors. Wells
Fargo is a publically traded government backed bank. This means that they offer products
from Fannie Mae, Freddie Mac, Federal Housing Administration, and Veterans
Administration. These are the major investors to Wells Fargos mortgage business.

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26

Customers
Customers are a vital part of any financial institution. They must be provided a value
based service or they will leave to the competition. Wells Fargo must ensure that they are
keeping a competitive advantage and a high level of service delivery to ensure that they keep
their current customers.
Labor
There is no shortage of labor in the industry. With so many other financial institutions
closing due to the economy there are a surplus of qualified individuals to fill the needs of the
remaining financial institutions.
Suppliers
Supply is not an issue since there is no product being exchanged. This is a service
based industry.
Internal Environment Scan
Strengths
19
th
on the Fortune 500 list in 2010
Among the worlds most 50 respected companies in Barrons 2010
Ranked #1 Green bank in Newsweek, 2009
Asset Leverage
Market Share Leadership
Unique Products
Reputation Management

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27

Weaknesses
Weak Asset Quality
Limited International Presence
Low Debit Card Market Hold
External Environment Scan
Opportunities
Acquisitions
Asset Leverage
Emerging Markets
Product / Service Expansion
Historically Low Rates
Threats
Competition
Economic Slowdown
Product Substitution
Government Regulations/Changes
Rising Rates/Inflation

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28

Long Term Objectives
Corporate Strategy
Our strategy is to continue to be the premier financial institution while
expanding and adapting to the market. We will accomplish this by maintaining an ethical
lending perspective while keeping our competitive advantage.
Our main focus will be on leveraging a differentiation strategy in order to continue to service
a broad spectrum of customers. Unlike most banks, Wells Fargo does not heavily segment
the market with the aim of attracting only good customers. It believes that all customers
can be good, it is just a matter of how the relationship is handled (Bradford, 2007).
Long-Term Objectives
Expand through mergers and acquisitions
Increase market share
Capitalize on rates
Plan Goals and Implementation
Short Term Objectives
Expand Through Mergers and Acquisitions
Review current market for opportunities
Identify key players in the industry
Increase growth
Gain Market Power

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29

Increase Market Share
Increase marketing
Evaluate current marketing plan & revise / update
Review competitive advantage
Find new customers in emerging markets
Provide value added services
Research and Development /Innovation
Drive an Aggressive sales campaign
Capitalize on Rates
When rates are down ensure that staffing is appropriate for volume
When rates are high add additional marketing to continue to bring in business
Anticipate rate changes based on the federal reserve projections
Functional Tactics
Functional tactics have been broken down into the different segments that need to be
addressed in order to meet the short and long term goals with the differentiation strategy.
These segments are marketing, operations, business development, service delivery, and
finance.
Functional Tactics: Marketing
Evaluate existing marketing plan
Innovate current marketing plan
Increase research and development budget
Market to the competitive advantage
Cross sell to internal customers
Leverage public relations / publicity

Wells Fargo
30

Functional Tactics: Operations
Ongoing training and development to foster innovation
Gallup Q12 action plans annually & follow up quarterly
Clifton strengths finder for all employees for self-assessment
Implement post contact surveys for customer contact positions
Create performance based incentive
Functional Tactics: Business Development
Create a SWOT for major competitors
Discuss SWOT with upper level management along with a strategy of differentiation
Create a referral process as well as an incentive for customers expanding their
product base with Wells Fargo / Wachovia.
Functional Tactics: Service Delivery
Provide ongoing training to staff
Provide ongoing training to management
Provide refresher training regarding the cost of losing a customer
Provide training to obtain referrals and leads
Ensure appropriate staffing based on projections
Functional Tactics: Finance
Benchmark financials against three major competitors
Establish quarterly goals
Create performance based bonuses and adjust budget
Add additional funding for research and development in current budget

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31

Organizational and Leadership Structure
A functional structure will be used to implement our strategy. This will consist of
splitting up goals and ensuring that each segment specializes in the area they will work in.
They will need to focus on communication and coordination across all channels due to the
level of specialization that is being placed on each item.
Critical Success Factors
In order for Wells Fargo to meet their strategic plan there needs to be many pieces in
place. Wells Fargo needs to ensure that they have enough diversification to make them stand
out from the competition. Being a financial institution the only real way to diversify is to
provide the best service delivery and value added options. In order to create excellent service
delivery you first need to hire the right people, and then provide constant training. Wells
Fargo has a history of being able to maintain and manage change, this skill is critical to the
success of the diversification plan. Wells Fargo has a very diverse portfolio so ensuring that
all employees that have contact with customers understand the other products and services
offered and how they can help the consumer; this will lead to more cross selling
opportunities. The main points that need to be focused on are hiring, training, development,
sales, and marketing. These items will need constant review and evaluation to ensure a
smooth plan implementation.

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32

Controls and Evaluation
Premise Controls
A premise control is a type of strategic control that involves identifying key assumptions
and premises for plans and then gathering data systematically to monitor their ongoing
accuracy (Planning Skills). Premise controls will be put in place to review change
management situations and how they are handled as well as the external environment changes
with emphasis on the competition.
Implementation Controls
Implementation Controls will be used to review budgeting compared to previous years and
ensure that the changes from the strategic plan are having a positive impact. The short term
objectives will also be reviewed and analyzed quarterly.
Concurrent Controls
Concurrent Controls will be used to measure the progress of the activities being implemented
in the strategic plan. The concurrent controls will review items such as the survey and ensure
that it is asking the right questions to achieve the desired responses from the customers. Also,
the training and development will be constantly reviewed to ensure that it is effective and up
to date. Overall each segment of the planning stage will be reviewed and analyzed during
implementation.

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33

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Grier, Peter. (2010, Jul 21). Financial Reform Law: Whats in it and how does it work?.
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